Annual Report & ACCOUNTS for the year ended 30 June 2014

HYR 2014

"From beginning to end, the development process can take between three and ten years before Launch."

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Although some products may have a slightly different path, most novel and generic products follow a fairly standard process containing five phases, defined as: Exploratory, Pre-Clinical, Clinical, File/Submission and Launch.

Dechra employs a structured process in its development pipeline while retaining an opportunistic and entrepreneurial approach. Focus is given to the Group's therapeutic sectors. New development opportunities and in-license opportunities are evaluated for strategic fit within these sectors; therapeutics outside of the key areas are considered for inclusion in the pipeline if they are novel and address medical needs in the veterinary market.

A product's return on investment can vary: novel developments tend to have a medium to long term realisation with attractive high value returns; generic developments generally have shorter timescales with returns dependent upon the number of other entrants and our speed to market relative to the competition. Dechra's current development pipeline is a mix of short, medium and long term opportunities.

Generating Ideas

The Exploratory phase begins with identifying a novel molecule, an opportunity to develop a new formulation for an existing molecule, or an in-license opportunity. Before initiating a development programme, each opportunity is assessed by market need, market value, therapeutic indications, strategic fit and the likely complexity of the regulatory pathway.

Making the Chemistry Work

The second phase of the process is Pre-Clinical, which involves the collection of a range of preliminary data. When initiating development of a novel product, the correct dose has to be titrated and a stable formulation, that can be reliably and consistently manufactured, must be developed. For a generic product, the pioneer formulation may not meet the current regulatory requirements and may need to be reformulated. This phase is vital prior to initiating the clinical phase which involves expensive clinical trials or bioequivalence studies.

Entering Clinical Trials

The Clinical phase is the longest part of the process, potentially taking two or three years. After the formulation has been demonstrated to be stable, two to three pilot batches are manufactured for use in safety studies, efficacy studies and stability testing. For generic products, the batches are used in one or more bioequivalence studies to demonstrate that activity will replicate the pioneer product. If the studies conducted during the Clinical phase demonstrate the required safety, efficacy and chemical stability of the product, regulatory dossiers are prepared for File/Submission.

From beginning to end, the development process can take between three and ten years before Launch.

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